This theoretical paper explores the impact of gender diversity on team production. The key assumption is that men derive utility from signaling high ability to female colleagues. The analysis shows that some gender diversity maximizes expected team production if (i) men and women have similar expected ability, and (ii) monetary incentives to exert effort are not too strong. The study generates important and testable economic implications: the presence of women changes the behavior of male team members, gender diversity has the biggest effects in young teams, and monetary incentives crowd-out the impact of gender diversity.